What Types of Offshore Software Development Models Are There?

Looking to outsource your software development? With numerous options overseas, figuring out the best offshore development model for your business can get confusing.

However, not all offshore models are created equal. Choosing the right approach can make or break your offshore success. So, how do they differ?

Don’t worry. We’ve got your back!

In this article, we'll explore three standard offshore development models: the Fixed-Price, Time and Material (T&M), and Dedicated Team models. We’ll look at their pros and cons and how they operate.

Read on to get the know-how on which is best for your business!

The Fixed-price model

This traditional model remains popular for its predictability and simplicity. Here's how it works:

Imagine you have a well-defined project with precise specifications, timelines, and budget plans. The Fixed-price outsourcing model could be your go-to option. The outsourcing partner provides you with a fixed project cost upfront in this approach. This cost remains unchanged, regardless of the actual time and resources invested by the outsourcing team.

Pros:

• Costs are 100% predictable from the start
• Zero surprises or cost overruns if requirements are locked
• Simple to budget and get financial buy-in

Cons:

• Specs need to be highly detailed
• Scope expansion is a project killer
• Change requests can delay delivery and bust bus

What it’s best for

The Fixed Price model is ideal for well-defined, short-term projects with limited room for scope changes. It works well when you clearly understand your project's specifications and can provide precise documentation. It's not so great for complex software with shifting requirements.

The Time and Material (T&M) model

With T&M, you pay hourly or daily rates for offshore developers working on your project.

Picture a scenario where your project's scope isn't entirely clear, and you expect changes or improvements along the way. This approach provides more flexibility, as costs are determined by the time and resources spent.

Pros:

• Flexibility to handle changing scope and fluid requirements
• Only pay for actual work performed, even if specs change
• Avoid endless haggling over change orders

Cons:

• Hourly pricing means costs are less predictable
• Communication and alignment are crucial to preventing scope creep
• Potential for delays as the project scope is more fluid, which can lead to longer development cycles

What it’s best for

The Time and Material model is well-suited for projects with evolving requirements, long-term collaborations, or situations where you're not entirely sure about the project's final scope.

The Dedicated Team model

This offshore development model is the gold standard for most complex tech projects.

Here, you hire specific offshore developers dedicated just to your project. They become an integrated extension of your in-house staff.

The Dedicated Team model gives you unparalleled flexibility, alignment, and oversight. You stay in the driver's seat by managing the dedicated resources day-to-day, ensuring total control and smooth continuity. Plus, you can tweak team sizes and payment plans to your advantage.

Pros:

• Tight integration between onshore and offshore staff
• Developers focused solely on your project and goals
• Flexible scaling up or down as needs change
• Access to scarce skills like AI, security experts
• Lower costs while maintaining quality
• Tight oversight and IP protection
• Customisable team sizes and payment plans

Cons:

• Needs solid in-house project management
• Potential time-zone complications

What it’s best for

The Dedicated Team model shines when you need a high degree of control, want a long-term development partner, and can commit to resource-intensive management.

Source: https://www.articlesfactory.com/articles/business/what-types-of-offshore-software-development-models-are-there.html

At The Scalers, we help innovative global businesses build highly talented software development teams in Bangalore — the second largest tech ecosystem in the world.